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Firtash Files Motion To Dismiss DOJ FCPA And Related Charges Brought In 2014

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As highlighted in this prior post, in April 2014 the DOJ announced the unsealing of a criminal indictment charging six individuals “with participating in an alleged international racketeering conspiracy involving bribes of state and central government officials in India to allow the mining of titanium minerals.”

Among those charged was Dmitry Firtash, a high-profile Ukrainian businessman.

Prior to the April 2014 unsealed indictment, Firtash was arrested in Austria and thereafter paid $174 million to post bail. Responding to the U.S. criminal charges, as noted in this prior post, Firtash released a video which insisted he is an innocent party caught at the center of a “battlefield for the two biggest global players of Russia and the USA.”

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A Case Study In Risk Aversion Or What Happens When Defendants Fight Back

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[This post is part of a periodic series regarding “old” FCPA enforcement actions]

Previous posts here and here highlighted the 2001 DOJ/SEC FCPA enforcement action against KPMG Siddharta Siddharta & Harsono (KPMG-SSH) and Sonny Harsono and Baker Hughes regarding alleged improper payments in connection with an Indonesia tax assessment. All of the defendants resolved the enforcement actions without putting the DOJ/SEC to its burden of proof (the risk aversion portion of this post).

However, also in 2001 the SEC charged Eric Mattson (the former CFO of Baker Hughes) and James Harris (the former Controller of Baker Hughes) with Foreign Corrupt Practices Act offenses based on the same substantive allegations. Unlike the other defendants, as highlighted in this post, Mattson and Harris fought back – a process that resulted in a federal court judge dismissing the FCPA charges against them.

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Other Recent Supreme Court Rebukes Of Enforcement Theories Relevant To FCPA Enforcement

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U.S. v. McDonnell – the unanimous Supreme Court decision earlier this week vacating the former Virginia governor’s criminal convictions – was relevant to Foreign Corrupt Practices Act enforcement because the key issue in McDonnell , the proper meaning of the term “official action,” is term that also appears in the FCPA’s anti-bribery provisions.

In the FCPA’s nearly 40 years of existence, the Supreme Court has never addressed an FCPA issue. It is unlikely that the Supreme Court will address an FCPA topic anytime soon because of how the government has chosen to enforce the FCPA (the vast majority of corporate enforcement actions are resolved without any meaningful judicial scrutiny and the vast majority of corporate enforcement actions lack individual prosecutions)

Thus, when thinking about how the Supreme Court might address certain FCPA issues, one has to analogize to other relevant Supreme Court decisions.

This post highlights other recent Supreme Court decisions, in addition to McDonnell, to rebuke enforcement theories relevant to FCPA enforcement.

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Friday Roundup

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From the dockets, you gotta be kidding me, it’s a numbers game, former DOJ FCPA Unit Chief Duross on …, scrutiny updates, a foreign official teaser, a bracket of a different kind, and an event notice. It’s all here in the Friday Roundup.

From The Dockets

Two developments in DOJ FCPA individual actions.

One the DOJ apparently wants you to do know about because it issued a press release, the other apparently not because there was no press release.

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Case Law Of Note

Judicial Decision

Judicial opinions construing the Foreign Corrupt Practices Act are rare. Thus, when they occur (even if only a trial court opinion on a pre-trial motion to dismiss) FCPA judicial opinions are worthy of note.

As highlighted in this prior post, in January 2015 the DOJ criminally charged Dmitrij Harder, the former owner and President of Chestnut Consulting Group Inc. and Chestnut Consulting Group Co., for allegedly bribing an official with the European Bank for Reconstruction and Development (“EBRD”).

The enforcement action was notable in that it invoked the rarely used “public international organization” prong of the FCPA’s “foreign official” element.

As highlighted here, in October 2015, Harder filed this motion to dismiss:  In summary fashion it stated:

“The Indictment fails to accurately allege the elements of a violation under the Foreign Corrupt Practices Act (“FCPA”) – it is devoid of any allegations that Mr. Harder paid an allegedly corrupt payment to a “foreign official,” fails to state required allegations when an allegedly corrupt payment is made to a third party, and impermissibly substitutes “public international organization” in the charging language against Mr. Harder. The FCPA counts should also be dismissed because the provision permitting the President to expand the term “foreign official” by identifying “public international organizations” as authorized by 15 U.S.C. § 78dd-2(h)(2)(B) is unconstitutional.”

In an unsurprising development given the procedural posture of the motion, last week Judge Paul Diamond (E.D. Pa.) denied the motion. It is believed to be the first judicial decision in FCPA history construing the rarely implicated “public international organization” prong of the FCPA’s “foreign official” definition.

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